When you start a new business the entire family is affected and not always in a positive way. Becoming an entrepreneur can be emotionally draining and time consuming. It can turn into a very stressful situation for you and your family. This problem is exacerbated when family members are unsupportive or resentful of the new business. This is why it’s important that you are very professional in handling business matters from the on-start.
[Related: ‘Shark Tank’ Investor Daymond John Advises Minority Entrepreneurs]
You our family must give you the respect, support, and trust you need to succeed.
If the family believes you are indulging a pipe dream and that the business will not succeed, they may tolerate your business in the beginning but grow resentful down the road. If your spouse doesn’t believe your business is a serious venture, there will be conflict in the relationship.
What if your spouse gives you $10,000 to start the business; is this a loan? Or what if your spouse works for you free of charge or contributes to refining the business idea. Once the business starts making money, will you payback your spouse? This is why it is important to think through such critical matters.
Here are five things you should do to better prepare your family for entrepreneurship:
- Create a family business plan. Establish a family plan whereby members determine the overall goals of the family and the resources needed to achieve those objectives. Also address such issues as ownership and management control, family involvement in the business, and overall strategic direction of the business. Use the family plan to drive the business and manage expectations, especially if you plan to have your children who are married and their spouses involved with the business.
- Understand what family sacrifices will be made. There should be an agreement on what each member has to give up like entertainment, vacations, eating out, and luxury items. Examine what extent are you putting the family resources and assets at risk for the business, such as using the family home as collateral for a business loan or tapping into the funds of your 401k plan? If the business fails, the family’s savings could be wiped out; the home foreclosed; and even the college education funds for the kids or your retirement money depleted.
- Talk openly with family members. If you are a home-based business talk to the people you live with. They may have no idea what is going on or how hard you are working once they leave the house. So, keep them abreast of what is happening with the business. If you get a new client, a new development, or a new prospect tell them about it. Even if your spouse or children are not directly involved with the business, they need to be in the loop. Consider holding regularly scheduled structured family meetings with a written agenda.
- Teach your children about the business. Explain to them concepts like cash flow–money coming in and money flowing out of the business. But don’t force them to work for the business. It is a great idea to expose children, especially young kids, to the principals of entrepreneurship such as hard work and dedication. If your children aren’t interested in your line of work and find it boring, find something that they like to do.
- Develop and an exit strategy for the business. Meaning is this going to be a family business that is passed down from generation to generation. Or do you plan to retire in 25 years and sell the business. Will your children share in the assets of the business if it’s sold or when you die, even though they may never work in the business or claim any ownership stake. What happens or how is the business impacted if you and your spouse get a divorce?